The fallout, like Mr. Trump’s second term, was dizzying.
Mr. Musk’s post quickly stoked outrage among conservatives over the use of taxpayer dollars on migrants. The following day, the Trump administration fired four FEMA officials, including the agency’s chief financial officer. And the day after that, on Feb. 12, the city’s accountants made a surprising discovery when they checked their ledgers that morning: The money had disappeared overnight.
Kristi Noem, the homeland security secretary, quickly claimed responsibility, saying she had “clawed back the full payment that FEMA deep state activists unilaterally gave to N.Y.C. migrant hotels.”
The lawsuit argued that the federal government tried to justify its actions after the fact.
On Feb. 19, more than a week after the clawback, the city received a letter from Cameron Hamilton, the FEMA acting director, who threatened to withhold more than $188 million the agency had awarded the city, including the money it had already seized.
Mr. Hamilton wrote that Homeland Security had “significant concerns that S.S.P. funding is going to entities engaged in or facilitating illegal activities,” referring to the shelter program. He cited a New York Post story to argue that a Venezuelan gang, Tren de Aragua, had taken over the Roosevelt Hotel, one of the city’s largest migrant shelters, a claim the city disputed. The letter suggested that the city may have been complicit in harboring undocumented immigrants and encouraging illegal immigration.
City lawyers argued that the letter was “cover” for the Trump administration’s “real intent, which — as they’ve stated publicly — is to withhold the funds permanently because they oppose the purposes for which the funds were appropriated, awarded, approved, and paid.”
In its lawsuit, which claimed that FEMA violated federal regulations and the terms of the Shelter and Services Program grant, the city is seeking the return of the nearly $80.5 million and urging a judge to prevent the federal government from taking more money from city bank accounts.
